Maryland's Department of Health and Mental Hygiene (State agency) did not always comply with Federal and State requirements when it claimed costs for communicable disease care services. Of the 124 claim lines that we sampled, 49 complied with Federal and State requirements; however, 75 did not. On the basis of our sample results, we estimate that the State agency claimed at least $16 million (Federal share) in unallowable costs. The State agency claimed these unallowable costs because it did not have sufficient internal controls to ensure that nursing facilities were correctly claiming communicable disease care services.

We recommended that the State agency refund $16 million to the Federal Government. The State agency partially concurred with our findings.